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Exhibit 10.4
EXECUTION COPY
SUBSCRIPTION AGREEMENT
BY AND BETWEEN
INTERCONTINENTAL TELECOMMUNICATIONS CORP.
AND
CAPITAL COMMUNICATIONS CDPQ INC.
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MAY 31, 2000
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS............................................................................................1
ARTICLE II REPRESENTATIONS OF THE COMPANY........................................................................6
2.1 Existence and Good Standing....................................................................6
2.2 Capital Stock..................................................................................6
2.3 Authorization and Validity of the Documents....................................................7
2.4 Subsidiaries and Investments...................................................................7
2.5 Financial Statements...........................................................................8
2.6 Real Property..................................................................................9
2.7 Personal Property..............................................................................9
2.8 Material Contracts.............................................................................9
2.9 Consents and Approvals; No Violations.........................................................11
2.10 Litigation....................................................................................11
2.11 Compliance with Laws..........................................................................12
2.12 Employment Relations; Employee Benefits.......................................................12
2.13 Securities Law Compliance.....................................................................12
2.14 Transactions with Affiliates..................................................................12
2.15 Permits.......................................................................................13
2.16 Broker's or Finder's Fees.....................................................................13
2.17 Absence of Changes............................................................................13
2.18 No Undisclosed Liabilities....................................................................15
2.19 Taxes.........................................................................................15
2.20 Intellectual Property Rights..................................................................16
2.21 Insurance.....................................................................................17
2.22 Environmental Matters.........................................................................17
2.23 Guarantees....................................................................................18
2.24 Computer Programs and Software................................................................18
2.25 No Illegal or Improper Transactions...........................................................18
2.26 Bank and Brokerage Accounts; Investment Assets................................................18
2.27 No Powers of Attorney.........................................................................19
2.28 Books and Records.............................................................................19
2.29 Disclosure....................................................................................19
ARTICLE III REPRESENTATIONS OF THE SUBSCRIBER...................................................................19
3.1 Existence and Good Standing; Power and Authority..............................................19
3.2 Restrictive Documents.........................................................................20
3.3 Purchase for Investment.......................................................................20
3.4 Broker's or Finder's Fees.....................................................................20
3.5 Restricted Securities.........................................................................20
3.6 Legends.......................................................................................20
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ARTICLE IV COVENANTS............................................................................................21
4.1 Regulatory and Other Approvals................................................................21
4.2 Diligence by Subscriber.......................................................................21
4.3 No Solicitations..............................................................................22
4.4 Conduct of Business...........................................................................22
4.5 Employee Matters..............................................................................23
4.6 Notice and Cure...............................................................................23
ARTICLE V ISSUANCE OF SECURITIES; PAYMENT OF SUBSCRIPTION PRICE; CLOSINGS.......................................24
5.1 Issuance of Preferred Stock...................................................................24
5.2 Subscription Price............................................................................24
5.3 Time and Place of Closings....................................................................24
5.4 Closing Deliveries............................................................................24
ARTICLE VI CONDITIONS TO THE SUBSCRIBER'S OBLIGATIONS...........................................................25
6.1 Good Standing and Other Certificates..........................................................25
6.2 Truth of Representations and Warranties.......................................................25
6.3 Performance of Agreements.....................................................................25
6.4 No Litigation.................................................................................25
6.5 Third Party Consents; Governmental Approvals..................................................25
6.6 Certificate of Designation....................................................................25
6.7 Investor Rights Agreement.....................................................................25
6.8 Taxes; Financial Statements...................................................................26
6.9 Transfer of Microtec Licenses.................................................................26
6.10 No Material Adverse Effect....................................................................26
6.11 Compliance with Labor Law Regulations.........................................................26
6.12 Opinions of Company Counsel...................................................................26
6.13 D & O Insurance...............................................................................26
6.14 Business Plan.................................................................................26
6.15 Ongoing Business..............................................................................26
6.16 Preferred Stock...............................................................................26
6.17 Employee Confidentiality......................................................................27
6.18 Other Documents...............................................................................27
6.19 Transfer of Contracts.........................................................................27
6.20 Joint Marketing Agreement.....................................................................27
ARTICLE VII CONDITIONS TO THE COMPANY'S OBLIGATIONS.............................................................27
7.1 Truth of Representations and Warranties.......................................................27
7.2 Third Party Consents; Governmental Approvals..................................................27
7.3 Performance of Agreement......................................................................27
7.4 No Litigation.................................................................................27
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ARTICLE VIII POST-CLOSING AGREEMENTS............................................................................28
8.1 Financial Statements and Other Information....................................................28
8.2 Reservation of Common Stock; Valid Issuance...................................................28
8.3 Further Assurances; Post-Closing Cooperation..................................................29
8.4 Compliance with FCPA..........................................................................29
8.5 Use of Proceeds...............................................................................30
8.6 Transfer of Microtec Licenses.................................................................30
8.7 Transfer of Contracts.........................................................................30
ARTICLE IX SURVIVAL.............................................................................................30
9.1 Survival......................................................................................30
ARTICLE X INDEMNIFICATION.......................................................................................30
10.1 Indemnification...............................................................................30
10.2 Contribution; Limitations on Indemnification..................................................31
10.3 Indemnification Procedure.....................................................................31
ARTICLE XI TERMINATION..........................................................................................33
11.1 Termination...................................................................................33
11.2 Effect of Termination.........................................................................33
ARTICLE XII MISCELLANEOUS.......................................................................................33
12.1 Confidentiality...............................................................................33
12.2 Knowledge of the Company......................................................................34
12.3 Expenses......................................................................................34
12.4 Governing Law.................................................................................34
12.5 Captions......................................................................................34
12.6 Publicity.....................................................................................34
12.7 Notices.......................................................................................34
12.8 Parties in Interest...........................................................................36
12.9 Counterparts..................................................................................36
12.10 Entire Agreement..............................................................................36
12.11 Amendments....................................................................................36
12.12 Severability..................................................................................37
12.13 Third Party Beneficiaries.....................................................................37
12.14 Arbitration...................................................................................37
12.15 English Language..............................................................................38
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SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT dated as of May 31, 2000 by and between
INTERCONTINENTAL TELECOMMUNICATIONS CORP., a Florida corporation, d/b/a XXX.xxx
(the "Company"), and CAPITAL COMMUNICATIONS CDPQ, INC., a corporation
incorporated under the laws of Quebec, Canada (the "Subscriber").
W I T N E S S E T H:
WHEREAS, the Subscriber desires to subscribe for, and the Company
desires to issue, 4,914,005 shares (the "Preferred Shares") of Preferred Stock,
par value $0.0001 per share, of the Company which, after giving effect to the
transactions contemplated hereby, shall constitute 100% of the issued and
outstanding Series A Convertible Preferred Stock of the Company (the "Preferred
Stock");
WHEREAS, on or prior to the execution and delivery of this Agreement,
the Company shall have filed with the Secretary of State of the State of
Florida, a Certificate of Designation, in substantially the form attached hereto
as Exhibit A, setting forth the rights and obligations relating to the Preferred
Stock (the "Certificate of Designation") including without limitation,
provisions relating to the conversion of the Preferred Stock into the Company's
Common Stock, par value $0.0001 per share (the "Common Stock"); and
WHEREAS, at the closing of the transactions contemplated hereby, the
Company, the shareholders of the Company and the Subscriber have executed and
delivered an Investor Rights Agreement, in substantially the form attached
hereto as Exhibit B, setting forth the rights and obligations relating to the
holders of the Preferred Stock (the "Investor Rights Agreement").
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
DEFINITIONS
As used in this Agreement, and unless the context requires a different
meaning, the following terms have the meanings indicated:
"Action or Proceeding" means any action, suit, arbitration, proceeding
or government entity investigation or audit.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with, such Person; provided, however, that, an Affiliate shall include
any entity that directly or indirectly (including through limited partner or
general partner interests) owns more than 5% of any class of the equity of any
other entity. For
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the purposes of this Agreement, the Certificate of Designation and the Investor
Rights Agreement, the Company shall not be considered an Affiliate of the
Subscriber.
"Agreement" shall mean this Subscription Agreement, as the same may be
amended, supplemented or modified in accordance with the terms hereof, from time
to time.
"Applicable Law" shall mean any constitution, statute, law, rule,
regulation, ordinance, judgment, order, decree, Permit, or any published
directive, guideline, requirement or other governmental restriction which has
the force of law, or any determination by, or interpretation of any of the
foregoing by, any judicial authority, binding on a given Person whether in
effect as of the date hereof or as of any date thereafter.
"Balance Sheet Dates" shall have the meaning set forth in Section 2.5
of this Agreement.
"Board of Directors" shall have the meaning set forth in Section 2.3 of
this Agreement.
"Books and Records" means all files, documents, instruments, papers,
books and records relating to the business or condition of the Company,
including without limitation financial statements, Tax Returns and related work
papers and letters from accountants, budgets, pricing guidelines, ledgers,
journals, deeds, title policies, minute books, stock certificates and books,
stock transfer ledgers, contracts, Permits, customer lists, computer files and
programs, retrieval programs, operating data and plans and environmental studies
and plans.
"Brazil" means the Federative Republic of Brazil.
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of New York
are authorized or obligated by law or executive order to close.
"Business Plan" shall mean the business plan of the Company attached
hereto as Exhibit E.
"Certificate of Designation" shall have the meaning set forth in the
recitals of this Agreement.
"Closing" shall have the meaning set forth in Section 5.3 of this
Agreement.
"Closing Date" shall mean May 31, 2000.
"Commission" shall mean, at any time, the Securities and Exchange
Commission or any other Federal agency then administering the Securities Act and
other Federal securities laws.
"Common Stock" shall have the meaning set forth in the recitals of this
Agreement.
"Company" shall have the meaning set forth in the first paragraph of
this Agreement.
"Company Property" shall mean any real property and improvements owned,
leased, used, operated or occupied by any Transaction Party.
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"Confidentiality Agreement" shall mean a confidentiality agreement
between the Company and an employee substantially in the form of Exhibit F
attached hereto.
"Damages" shall have the meaning set forth in Section 10.1 of this
Agreement.
"Documents" shall mean, collectively, this Agreement, the Certificate
of Designation, the Investor Rights Agreement and any other agreements or
instruments delivered in connection with the foregoing.
"Dollars" and "$" shall mean United States Dollars.
"Employee Stock Option Plan" shall have the meaning set forth in
Section 2.2 of this Agreement.
"Encumbrances" means any mortgage, security interest, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), charge, preference, priority or other security agreement, option,
warrant, attachment, right of first refusal, preemptive, conversion, put, call
or other claim or right, restriction on transfer (other than restrictions
imposed by Applicable Law), or preferential arrangement of any kind or nature
whatsoever (including any restriction on the transfer of any assets), any
conditional sale or other title retention agreement, any financing lease
involving substantially the same economic effect as any of the foregoing and the
filing of any financing statement with the pertinent public or private registry.
"Environmental Law" means any Applicable Law relating to human health,
safety or protection of the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous materials in the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), or otherwise relating to the
treatment, storage, disposal, transport or handling of any hazardous material.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"FCPA" shall mean the United States Foreign Corrupt Practices Act of
1977, as amended.
"GAAP" shall have the meaning set forth in Section 2.5 of this
Agreement.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, Brazil, any other country or any domestic or foreign state,
county, city or other political subdivision.
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness for borrowed money or for the deferred purchase price of property
or services, (ii) all indebtedness of the type otherwise described in this
definition secured by any lien on any property owned by such Person or any of
its Subsidiaries, (iii) capitalized lease obligations, (iv) all guarantees of
any type of indebtedness otherwise described in this definition, (v) all
obligations of such Person
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to pay a specified purchase price for goods or services, whether or not
delivered or accepted, i.e., take-or-pay or similar obligations and (vi)
interest rate protection hedging agreements, currency hedging agreements or
commodity hedging agreements.
"Intellectual Property" means all patents and patent rights, trademarks
and trademark rights, trade names and trade name rights, service marks and
service xxxx rights, service names and service name rights, brand names,
inventions, processes, formulae, copyrights and copyright rights, trade dress,
business and product names, logos, slogans, trade secrets, industrial models,
processes, designs, methodologies, computer programs (including all source
codes) and related documentation, technical information, manufacturing,
engineering and technical drawings, know-how and all pending applications for
and registrations of patents, trademarks, service marks and copyrights.
"Investor Rights Agreement" shall have the meaning set forth in the
recitals of this Agreement.
"Investment Assets" means all debentures, notes and other evidences of
Indebtedness, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by any
Transaction Party (other than securities issued by any Subsidiary).
"Liabilities" means all Indebtedness, obligations and other liabilities
of a Person (whether absolute, accrued, contingent, fixed or otherwise, or
whether due or to become due).
"Licenses and Permits" shall mean, whether these terms are used
collectively or individually, any Federal, state, local or other governmental or
other third party permits (including occupancy permit), licenses, consents,
certificates of authority, authorizations, approvals, registrations, franchises
or similar consents under Applicable Law, including, without limitation any
licenses or permits necessary to operate any telecommunications towers or use
any spectrum, granted or issued by any Governmental or Regulatory Authority
including, without limitation, Anatel.
"Material Adverse Effect" shall mean, with respect to a Transaction
Party, a material adverse effect on the business, prospects, assets,
liabilities, revenues, costs and expenses, income before provision for income
taxes, operations or condition, financial or otherwise, of the such Person,
other than changes or effects resulting from changes attributable to conditions
affecting the applicable business generally, changes in general economic
conditions, cyclical changes that are consistent with the past operating history
of the such Person's business, or changes attributable to the announcement or
pendency of this transaction. An event should be deemed to constitute a Material
Adverse Effect if the cumulative effect of such event and all other then
existing events could reasonably be expected to result in a Material Adverse
Effect.
"Permit" shall mean certificate, registration, franchise, license,
consent, authorization, and similar consents held by any Transaction Party,
including, without limitation, any Permits issued by Anatel.
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"Permitted Business" shall mean any business in which any of the
Transaction Parties are engaged in on the Closing Date, and any reasonable
extensions thereof; provided, however, that such businesses are not primarily
operated in any country which is the target of any United States boycott laws,
embargo laws, or the substantial equivalent thereof.
"Permitted Encumbrances" shall mean (i) any Encumbrance for Taxes not
yet due or delinquent or being contested in good faith by appropriate
proceedings for which adequate reserves have been established in accordance with
GAAP, (ii) any statutory Encumbrance arising in the ordinary course of business
by operation of Applicable Law with respect to a Liability that is not yet due
or delinquent and (iii) any minor imperfection of title or similar Encumbrance
which individually or in the aggregate with other such Encumbrances does not
materially impair the value of the property subject to such Encumbrance or the
use of such property in the conduct of the business of any Transaction Party.
"Person" shall mean and include natural persons, corporations,
sociedades anonimas, limited partnerships, general partnerships, limited
liability companies, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"Preferred Shares" shall have the meaning set forth in the recitals of
this Agreement.
"Preferred Stock" shall have the meaning set forth in the recitals of
this Agreement, and, in any event, shall be issued on the terms and conditions
set forth in the Certificate of Designation.
"Prohibited Payment" shall have the meaning set forth in Section 2.25
of this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder.
"Securities Laws" shall mean the Securities Act, the Exchange Act and
the rules and regulations promulgated thereunder and under any applicable state
securities laws.
"Subscriber" shall have the meaning set forth in the first paragraph of
this Agreement.
"Subscription Price" shall have the meaning set forth in Section 5.2 of
this Agreement.
"Subsidiary" shall have the meaning set forth in Section 2.4(a) of this
Agreement.
"Taxes" means (a) any and all taxes, levies or other like assessments,
charges or fees (including estimated taxes, charges and fees), including,
without limitation, income, corporation, add-on minimum, ad valorem, advance
corporation, gross receipts, transfer, excise, property, sales, use,
value-added, Permit, payroll, employment, severance, pay as you earn,
withholding on amounts paid by or to the relevant party, social security and
franchise or other governmental taxes or charges, imposed under Applicable Law;
and such term shall include any interest (punitive or otherwise), penalties or
additions to tax related or attributable to such taxes; or
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(b) Liability for the payment of any amounts of the type described in (a) as a
result of any obligation to indemnify any other Person.
"Tax Return" means any report, return, statement or other written
information required to be supplied to a taxing authority in connection with
Taxes.
"Transaction Party" shall have the meaning set forth in Section 2.1 of
this Agreement.
ARTICLE II
REPRESENTATIONS OF THE COMPANY
In order to induce the Subscriber to enter into this Agreement and to
subscribe for the Preferred Stock, the Company represents and warrants to and
agrees with the Subscriber as follows:
2.1 EXISTENCE AND GOOD STANDING. The Company and each of its
Subsidiaries (each a "Transaction Party," and collectively, the "Transaction
Parties") is a Person, duly organized, validly existing and in good standing, or
the equivalent thereof, under the laws of the jurisdiction of its organization.
Each Transaction Party has the requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
as proposed to be conducted. Except as set forth in Schedule 2.1, each
Transaction Party is duly qualified or licensed to do business and is in good
standing, or the equivalent thereof, and is authorized to do business, in each
jurisdiction in which the character or location of the properties owned, leased
or operated by such entity or the nature of the business conducted by such
entity makes such qualification or license necessary, except where any such
failure to be duly qualified or licensed or in good standing, or the equivalent
thereof, would not have a Material Adverse Effect.
2.2 CAPITAL STOCK. Immediately prior to giving effect to the
transactions contemplated hereby, the Company had an authorized capitalization
consisting of 100,000,000 shares of Common Stock, par value $0.0001 per share
("Common Stock"), and 20,000,000 shares of preferred stock par value $0.0001 par
share ("Preferred Stock") of which 11,415,265 shares of Common Stock were
outstanding and 7,518,810 shares were being held in reserve for issuance upon
the exercise of outstanding stock options and existing warrants. In addition,
the Employee Stock Option Plan provides for the grant of 2,850,000 additional
options to purchase Common Stock (the "Employee Stock Option Plan"). No shares
have been granted by the Company under the Employee Stock Option Plan. All
outstanding shares of capital stock of the Company (including, without
limitation, those purchased by the Subscriber hereunder) have been, and, on the
Closing Date, will be duly authorized and validly issued and fully paid and
nonassessable. Schedule 2.2 contains a true and complete list of the existing
shareholders of the Company, and their respective ownership of capital stock of
the Company. Except as set forth on Schedule 2.2, and except for the Preferred
Stock, there will be no outstanding subscriptions, options, warrants, rights,
calls, commitments, conversion rights, rights of exchange, plans or other
agreements or commitments, contingent or otherwise, of any character providing
for the purchase, redemption, acquisition, retirement, issuance or sale by any
Transaction Party of any shares of capital stock of any Transaction Party or
other securities exchangeable or convertible into capital stock of any
Transaction Party, in each case subject to adjustment based on the
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exercise of outstanding stock options and existing warrants, and there are no
stock appreciation rights or phantom stock plans outstanding. Schedule 2.2 sets
forth the aggregate number of shares of Common Stock which, as of the date of
this Agreement, the Company is obligated to issue in connection with each
specific item set forth on Schedule 2.2 and described in the immediately
preceding sentence, after giving effect to the transactions contemplated
thereby. In addition, except as set forth in Schedule 2.2, there are no rights,
agreements, restrictions or encumbrances (such as preemptive rights, rights of
first refusal, rights of first offer, proxies, voting agreements, voting trusts,
registration rights agreements, shareholders agreements, etc., whether or not
any Transaction Party is a party thereto) nor are there any restrictions on the
transferability or sale of such capital stock pursuant to any provision of law,
contract or otherwise with respect to the purchase, sale or voting of any shares
of capital stock of any Transaction Party (whether outstanding or issuable upon
conversion, exchange or exercise of any other security of any Transaction
Party). Except as set forth in Schedule 2.2, no Transaction Party has any
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or exercisable for
securities the holders of which have the right to vote). The shares of Common
Stock to be issued upon exercise of the Preferred Stock are duly and validly
authorized and when issued upon exercise of the Preferred Stock, will be duly
and validly issued, fully paid and nonassessable, and free and clear of all
Encumbrances and preemptive or other similar rights other than Encumbrances, and
preemptive or similar rights which may have been granted by the Subscriber. The
delivery of a certificate or certificates at the Closing representing the
Preferred Stock will transfer to Subscriber good and valid title to the
Preferred Stock, free and clear of all liens, representing 30.09% of the issued
and outstanding capital stock of the Company and 18.41% of the capital stock of
the Company on a fully diluted basis.
2.3 AUTHORIZATION AND VALIDITY OF THE DOCUMENTS. The Company has the
requisite corporate power and authority to execute and deliver the Documents to
which it is a party and to perform its obligations thereunder. The execution,
delivery and performance of the Documents by the Company and the performance of
its obligations hereunder, including, without limitation, to own, hold, sell and
transfer (pursuant to this Agreement) the Preferred Stock, have been duly
authorized and approved by all necessary action (including, without limitation,
all action of the board of directors of the Company (the "Board of Directors"),
and shareholders or other required Persons of the Company) and no other action
on the part of such persons is necessary to authorize the execution, delivery
and performance of the Documents by the Company. No consent, approval or action
of, filing with or notice under Applicable Law on the part of any Transaction
Party is required in connection with the execution, delivery and performance of
the Documents. Each of the Documents has been duly executed and delivered by the
Company and, assuming due execution thereof by the other parties thereto, is a
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding brought in equity or at law).
2.4 SUBSIDIARIES AND INVESTMENTS. (a) Schedule 2.4 attached hereto
lists each Person in which the Company owns, directly or indirectly, any equity
security (each a "Subsidiary").
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For clarification purposes, both ITC Holdings Brasil S/C Ltda. and
Intercontinental Telecom Corporation do Brasil S/C Ltda. are Subsidiaries of
XXX.xxx.
(b) Schedule 2.4 lists the jurisdictions in which each Subsidiary
is qualified or licensed to do business and all lines of business in which each
Subsidiary is participating or engaged.
(c) Each Subsidiary has the equity capitalization (including
minority ownership) and the owners of record set forth in Schedule 2.4. All of
the outstanding shares of capital stock or other equity securities, as the case
may be, of each Subsidiary have been duly authorized and validly issued, are
fully paid and nonassessable and are not subject to, nor were they issued in
violation of, any preemptive rights, and, except as set forth in Schedule 2.4,
are owned, of record and beneficially, by a Transaction Party, free and clear of
all Encumbrances. There are no outstanding options, warrants, rights,
subscriptions, claims of any character, agreements, obligations, convertible or
exchangeable securities, or other commitments, contingent or otherwise relating
to the capital stock or other equity securities, as the case may be, of any
Transaction Party, pursuant to which such Transaction Party is or may become
obligated to issue or purchase any shares of capital stock or other equity
securities of such Transaction Party or any securities convertible into,
exchangeable for, or evidencing the right to subscribe for, any capital stock or
other equity securities of such Transaction Party other than such rights granted
to a Transaction Party.
(d) There are no restrictions of any kind which prevent or restrict
the payment of dividends by any Subsidiary.
2.5 FINANCIAL STATEMENTS. (a) The Company has delivered to Subscriber
audited financial statements (balance sheet and statement of operations,
including notes thereto) as of and for the twelve months ended April 30, 1999
and, with respect to each of its Subsidiaries, unaudited financial statements
(balance sheet and statement of operations, including notes thereto) as of and
for the eight months ended December 31, 1999 (collectively referred to as the
"Balance Sheet Dates"), and unaudited financial statements (balance sheet and
statement of operations) as of and for the 11 months ended March 31, 2000, in
each case in English (collectively, the "Financial Statements"). The Financial
Statements have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods indicated and with each other (except for the omission of footnotes
in the unaudited Financial Statements). The Financial Statements fairly present
the financial condition and operating results of each Transaction Party as of
the date, and for the periods, indicated therein. Other than as disclosed in the
Financial Statements, the Transaction Parties have no material liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to the Balance Sheet Dates and (ii) obligations
under contracts and commitments incurred in the ordinary course of business and
not required under GAAP to be reflected in the Financial Statements, which, in
both cases, individually or in the aggregate, are not material to the financial
condition or operating results of the Transaction Parties. Except as disclosed
in the Financial Statements, no Transaction Party is a guarantor or indemnitor
of any indebtedness of any other person, firm or corporation. Each Transaction
Party maintains and will continue to maintain a standard system of accounting
established and administered in accordance with GAAP.
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(b) Each of the balance sheets included in the Financial Statements
(including any related notes and schedules) fairly presents the financial
position of the respective Transaction Party as of its date and each of the
statements of operations, shareholders' equity (deficit) or cash flows included
in or incorporated by reference into the Financial Statements (including any
related notes and schedules) fairly presents the results of operations, retained
earnings or cash flows, as the case may be, of the entity or entities to which
it relates for the periods set forth therein, in each case in accordance with
GAAP consistently applied during the periods involved, except as may be noted
therein and, except in the case of the unaudited statements, subject to normal
recurring year-end adjustments.
2.6 REAL PROPERTY. (a) Each Transaction Party has a valid and
subsisting leasehold estate in and the right to quiet enjoyment of the real
properties leased by it for the full term of the lease thereof. Each lease
referred to in the preceding sentence is a legal, valid and binding agreement,
enforceable in accordance with its terms, of each Transaction Party and of each
other Person that is a party thereto, and except as set forth in Schedule
2.6(a), there is no, and no Transaction Party has received notice of any,
default (or any condition or event which, after notice or lapse of time or both,
would constitute a default) thereunder. No Transaction Party owes any brokerage
commissions with respect to any such leased space.
(b) The Company has delivered to Subscriber prior to the execution
of this Agreement true and complete copies of all leases (including any
amendments and renewal letters) with respect to the real property listed in
Schedule 2.6(a).
(c) Neither the Company nor any Transaction Party owns any real
property. Schedule 2.6(a) contains a true and correct list of each parcel of
real property leased by the Transaction Parties (as lessor or lessee).
2.7 PERSONAL PROPERTY. Each Transaction Party owns or otherwise
possesses adequate rights to use such items of personal property that are being
used in the conduct or operation of the business of the Transaction Parties (the
"Personal Property"). Schedule 2.7 accurately lists all items of Personal
Property owned by any Transaction Party, except for items having an original
cost of less than fifty-thousand U.S. Dollars (U.S.$50,000). Except as set forth
on Schedule 2.7 each Transaction Party has good and marketable title to all
Personal Property used by it, free and clear of all Encumbrances. Except as set
forth on Schedule 2.7 all machinery and equipment (including trucks and other
vehicles) owned by any Transaction Party and used in such Transaction Party's
business since the date of the Financial Statements: (a) is in good working
order and condition, ordinary wear and tear excepted, (b) is usable in the
ordinary course of business, and (c) has been maintained in a reasonably prudent
manner in the ordinary course of business. All fixed assets used by any
Transaction Party that are material to the operation of such Transaction Party's
business are owned by the applicable Transaction Party.
2.8 MATERIAL CONTRACTS. (a) Except as set forth on Schedule 2.8(a) and
Schedule 2.2 attached hereto, no Transaction Party is bound by (i) any
agreement, contract, instrument or commitment providing for annual payments of
more than $100,000, (ii) any agreement, indenture or other instrument which
contains restrictions with respect to payment of dividends or any other
distribution in respect of its capital stock providing for annual payments of
more than $100,000, (iii) any agreement or contract with any Affiliate, (iv) any
employment agreement,
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consulting agreement or any other similar type of contract (which entitles any
Person to over $100,000 per year) or (v) any agreement, contract or commitment
limiting the ability of any Transaction Party to engage in any line of business
or to compete with any Person or to otherwise acquire property or conduct
business in any area. Except as otherwise set forth on Schedule 2.8(a), each
contract or agreement set forth on Schedule 2.8(a) (or required to be set forth
in Schedule 2.8(a)) is in full force and effect and there exists no material
default or material event of default or to the knowledge of the Company, event,
occurrence, condition or act (including the consummation of the sale
contemplated hereby) which, with the giving of notice, the lapse of time or the
happening of any other material event or condition, would become a default or
event of default thereunder.
(b) The Joint Marketing Agreement between the Company, Vitech
America, Inc. ("Vitech") and Microtec Sistemas Industria e Comercio S.A.
("Microtec"), as amended, a copy of which is attached hereto as Exhibit "G" (the
"Joint Marketing Agreement"), is a valid and binding agreement of the Company,
Vitech and Microtec, enforceable against the Company, Vitech and Microtec in
accordance with its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws effecting the enforcement of creditors' rights generally and
by general equitable principles (regardless of whether such enforceability is
considered in a proceeding brought in equity or law). The Joint Marketing
Agreement provides to the Company the exclusive right to free and unlimited use
of the service and frequency licenses owned by Microtec (the "Microtec
Licenses"), to the extent of Microtec's rights under such licenses.
(c) The Microtec Licenses (i) have been duly authorized, granted
and delivered to Microtec, a wholly-owned Brazilian subsidiary of Vitech, by the
Brazilian Agencia Nacional de Telecomunicacoes ("Anatel") in accordance with all
applicable legal requirements, (ii) are owned by Microtec free and clear of any
Encumbrances, (iii) are valid for their stated uses, subject to terms of the Ato
2508 of March 16, 1999, and the Ato 2514 of March 17, 1999 both issued by Anatel
in favor of Microtec (the "Atos"), (iv) there are no material legal impediments
to the transfer of the Microtec Licenses to the Company or any of the Company's
Subsidiaries indicated by the Company, and (v) when transferred to the Company
or any of its Subsidiaries as indicated by the Company, the Microtec Licenses
will permit the Company to conduct its business in accordance with the Business
Plan, including building a broadband network in Brazil utilizing frequencies not
regulated by Anatel. Schedule 2.8(c) attached hereto contains a true and
complete copy of all Microtec Licenses.
(d) Microtec is and has been in compliance in all material respects
with the terms and conditions of the Microtec Licenses, and neither the Company
nor any of its officers or directors have any knowledge that the Microtec
Licenses will be modified, suspended or terminated.
(e) Except as disclosed in Schedule 2.8(e), no Transaction Party is
a party to, or bound by, any contract that has been or could reasonably be
expected to be, individually or in the aggregate with any other such contracts,
materially adverse to the business or condition of any Transaction Party.
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(f) Except as disclosed on Schedule 2.8(f), each Transaction Party
purchases from or sells products and services to other Persons pursuant to
written agreements, contracts, instruments or commitments to which such
Transaction Party is a party. Except as disclosed on Schedule 2.8(f), no
Transaction Party purchases from or sells to any Person any products or services
pursuant to any agreement, contract, instrument or commitment to which such
Transaction Party is not a party.
2.9 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and delivery
of this Agreement and the other Documents by the Company to which it is a party
and compliance by the Company with the terms and provisions hereof and thereof
and the issuance of the Preferred Stock by the Company and the consummation of
the transactions contemplated hereby does not and will not:
(a) violate or contravene any provision of the articles of
incorporation (or equivalent thereof) or bylaws (or equivalent thereof) of any
Transaction Party;
(b) violate or contravene any statute, rule, regulation, licensing
requirement, order or decree of any court, arbitrator or any other public body
or authority by which any Transaction Party is bound or by which any of its
properties or assets are bound;
(c) require any filing with, or permit, consent authorization,
qualification or approval of, or exemption from, or the giving of any notice to,
any governmental or regulatory body, agency or authority, or any other Person
(other than required filings under the Exchange Act), or
(d) result in a violation or breach of, conflict with, constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation, payment or acceleration) under, or
result in the creation of any Encumbrance upon any of the properties or assets
of any Transaction Party under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, license, franchise, permit, agreement,
lease, franchise agreement or any other instrument or obligation to which any
Transaction Party is bound, or by which it or any of its properties or assets
may be bound, including, without limitation, the Microtec Licenses.
2.10 LITIGATION.
(a) There is no action, suit, proceeding at law or in equity,
arbitration or administrative or other proceeding by or before (or, to the
knowledge of the Company, any investigation by) any governmental or other
instrumentality or agency pending, or, to the knowledge of the Company,
threatened, against or affecting any Transaction Party or any such entity's
directors, officers, properties or rights which could reasonably be expected to
have a Material Adverse Effect. No Transaction Party is subject to any judgment,
order or decree entered in any lawsuit or proceeding which could reasonably be
expected to have a Material Adverse Effect.
(b) There are no facts or circumstances known to the Company that
could reasonably be expected to give rise to any litigation that would be
required to be disclosed pursuant to clause (a) above. No Transaction Party is a
plaintiff in any Action or Proceeding.
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2.11 COMPLIANCE WITH LAWS. Each of the Transaction Parties is in
compliance in all material respects with all Applicable Laws, regulations,
licensing requirements, orders, judgments and decrees and has obtained all
required governmental approvals and permits in each jurisdiction in which they
currently do business. Without limiting the generality of the foregoing, each of
the Transaction Parties is in compliance in all respects with the FCPA.
2.12 EMPLOYMENT RELATIONS; EMPLOYEE BENEFITS.
(a) The Transaction Parties are in compliance with all Federal,
state or other Applicable Laws, domestic or foreign, respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and have not, and are not, engaged in any unfair labor practice and there is no
labor strike, dispute, slowdown or stoppage actually pending or threatened
against or involving any Transaction Party.
(b) Schedule 2.12(b) contains a list of the names of each director,
of each officer and of each full-time employee of each Transaction Party having
an annual salary or wages of at least U.S.$50,000. as of the date hereof,
together with each such person's position or function, annual base salary or
wages and any incentive or bonus arrangement with respect to such person in
effect on such date.
(c) Schedule 2.12(c) contains a true and complete list and
description of each of the benefits granted by the Transaction Parties,
including those provided for in any employment contracts. Other than the
benefits listed in Schedule 2.12(c), there are no other employee benefits
granted by the Transaction Parties that may be required under any Applicable
Law.
(d) Exhibit D contains a true and complete copy of the Employee
Stock Option Plan as of the date hereof.
2.13 SECURITIES LAW COMPLIANCE. Assuming that the representations set
forth in Article III are true and correct, the offering, issuance, sale and
delivery of the Preferred Stock to the Subscriber is exempt from the
registration requirements of the Securities Act. The Company has complied with,
or is exempt from, all registration requirements of all applicable state
securities laws, or foreign securities laws, in connection with the offering,
issue, sale and delivery of the Preferred Stock.
2.14 TRANSACTIONS WITH AFFILIATES. Except as disclosed in Schedule
2.14, as of the date of this Agreement, (i) there are no intercompany
Liabilities between the Company, its officers or directors, on the one hand, and
any Subsidiary, its officers or directors, on the other, (ii) neither the
Company nor any such officer, director, Affiliate provides or causes to be
provided any assets, services or facilities to any Transaction Party, and (iii)
no Transaction Party provides or causes to be provided any assets, services or
facilities to the Company or any such officer, director, Affiliate. Except as
disclosed in Schedule 2.14, each of the Liabilities and transactions listed in
Schedule 2.14 was incurred or engaged in, as the case may be, on an arm's-length
basis. Except as disclosed in Schedule 2.14, since the Balance Sheet Dates, all
settlements of intercompany Liabilities under items (i) to (iii) of this Section
2.14, have been made, and all allocations of intercompany expenses have been
applied, in the ordinary course of business.
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2.15 PERMITS. Schedule 2.15 contains a true and complete list of all
Permits used in and material to the business or operations of the Transaction
Parties, setting forth the owner, the function and the expiration and renewal
date of each such Permit. Prior to the execution of this Agreement, the Company
has delivered to Subscriber true and complete copies of all such Permits. Except
as disclosed in Schedule 2.15:
(i) the Transaction Parties own or validly hold each Permit
listed on Schedule 2.15;
(ii) each Permit listed in Schedule 2.15 is valid, binding and
in full force and effect; and
(iii) no Transaction Party is, or has received any notice that
it is, in default (or with the giving of notice or lapse of time or
both, would be in default) under any such Permit.
2.16 BROKER'S OR FINDER'S FEES. The Company has entered into, and is
solely responsible for all costs and obligations, under an agreement with Xxxxxx
Financial Corporation, a copy of which is attached hereto as Schedule 2.16.
Except for the Company's agreement with Xxxxxx Financial Corporation, no agent,
broker, person or firm acting on behalf of the Company is, or will be, entitled
to any commission or broker's or finder's fees from the Subscriber, any
Transaction Party, or from any Person controlling, controlled by or under common
control with any Transaction Party, in connection with the transactions
contemplated hereby based upon any arrangement or understanding made by or on
behalf of the Company or its officers or directors.
2.17 ABSENCE OF CHANGES. Except for the execution and delivery of this
Agreement and the transactions to take place pursuant hereto on the Closing
Date, since the Balance Sheet Dates there has not been any material adverse
change in the business or condition of any of the Transaction Parties, or any
event or development which, individually or together with other such events,
could reasonably be expected to result in a Material Adverse Effect. Without
limiting the foregoing, except as set forth in Schedule 2.17, there has not
occurred between the Balance Sheet Dates and the date hereof:
(i) any declaration, setting aside or payment of any dividend
or other distribution in respect of the capital stock of any
Transaction Party or any direct or indirect redemption, purchase or
other acquisition by any Transaction Party of any such capital stock of
or any option with respect to any Transaction Party;
(ii) any authorization, issuance, sale or other disposition by
any Transaction Party of any shares of capital stock of or option with
respect to any Transaction Party, or any modification or amendment of
any right of any holder of any outstanding shares of capital stock of
or option with respect to any Transaction Party;
(iii) (x) any increase in the salary, wages or other
compensation of any officer, employee or consultant of any Transaction
Party whose annual salary is, or after giving effect to such change
would be, U.S.$50,000 or more; (y) any establishment or modification of
(a) targets, goals, pools or similar provisions in respect of any
fiscal year under the Employee Stock Option Plan, employment contracts
or other employee
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compensation arrangements or (b) salary ranges, increase guidelines or
similar provisions under the Employee Stock Option Plan, employment
contracts or other employee compensation arrangements; or (z) any
adoption, entering into, amendment, modification or termination
(partial or complete) of the Employee Stock Option Plan except to the
extent required by Applicable Law and, in the event compliance with
legal requirements presented options, only to the extent the option
which the Transaction Party reasonably believed to be the least costly
was chosen;
(iv) (a) incurrences by the Transaction Parties of
Indebtedness in an aggregate principal amount exceeding U.S.$100,000
(net of any amounts discharged during such period), or (b) any
voluntary purchase, cancellation, prepayment or complete or partial
discharge in advance of a scheduled payment date with respect to, or
waiver of any right of any Transacting Party under, any Indebtedness of
or owing to any Transaction Party;
(v) any physical damage, destruction or other casualty loss
(whether or not covered by insurance) affecting any of the plant, real
or personal property or equipment of any Transaction Party in an
aggregate amount exceeding U.S.$100,000;
(vi) any material change in (x) any pricing, investment,
accounting, financial reporting, inventory, credit, allowance or tax
practice or policy of any Transaction Party, (y) any method of
calculating any bad debt, contingency or other reserve of any
Transaction Party for accounting, financial reporting or tax purposes
or (z) the fiscal year of any Transaction Party;
(vii) any write-off or write-down of or any determination to
write off or down any of the assets and properties of any Transaction
Party in an aggregate amount exceeding U.S.$100,000;
(viii) any acquisition or disposition of, or incurrence of an
Encumbrance (other than a Permitted Encumbrance) on, any assets and
properties of any Transaction Party;
(ix) any (x) amendment of the certificate or articles of
incorporation or by-laws (or other comparable corporate charter
documents) of any Transaction Party, (y) reorganization, liquidation or
dissolution of any Transaction Party or (z) business combination
involving any Transaction Party and any other Person;
(x) any entering into, amendment, modification, termination
(partial or complete) or granting of a waiver under or giving any
consent with respect to (a) any contract which is required (or had it
been in effect on the date hereof would have been required) to be
disclosed to the Subscriber prior to the Closing or (b) any material
License held by any Transaction Party;
(xi) capital expenditures or commitments for additions to
property, plant or equipment of any Transaction Party constituting
capital assets in an aggregate amount exceeding U.S.$100,000;
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(xii) any commencement or termination by any Transaction Party
of any line of business;
(xiii) any transaction or contemplated transaction by any
Transaction Party with any officer, director or Affiliate (other than a
Transaction Party) other than pursuant to any contract in effect on the
Balance Sheet Dates and disclosed to Subscriber;
(xiv) any entering into of an agreement to do or engage in any
of the foregoing after the date hereof; or
(xv) any other transaction involving or development affecting
any Transaction Party outside the ordinary course of business.
2.18 NO UNDISCLOSED LIABILITIES. Except as reflected or reserved
against in the balance sheet included in the Financial Statements, there are no
Liabilities against, relating to or affecting any Transaction Party or any of
their respective assets and properties, other than Liabilities incurred in the
ordinary course of business which in the aggregate are not material to the
business or condition of the Transaction Parties.
2.19 TAXES. Except as disclosed on Schedule 2.19 or as reserved for in
the Financial Statements:
(a) Each Transaction Party has (i) duly filed (or there has been
filed on its behalf) with the appropriate government entities all Tax Returns
required to be filed by it, all of which Tax Returns are true, correct and
complete in all respects and (ii) duly paid in full all Taxes owed by it whether
or not shown on any Tax Return;
(i) Each Brazilian Subsidiary has withheld and paid over to
the proper government entity in Brazil all applicable Taxes, including,
without limitation, all corporate income Taxes (IRPJ), social
contribution on profits (CSL), service Tax (ISS), withholding Taxes and
state value added Tax (ICMS);
(ii) Each Brazilian Subsidiary has withheld and paid over to
the proper government entity in Brazil all applicable labor Taxes and
social contributions, including, without limitation, the National
Institute of Social Security (INSS) and the Government Severance
Indemnity Fund for Employees (FGTS);
(b) Each Transaction Party has withheld and paid over to the proper
government entity under Applicable Law all Taxes required to have been withheld
and paid over to the proper government entity under Applicable Law in connection
with amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party;
(c) No audits, Actions or Proceedings, or other administrative or
court claims are presently pending or, to the knowledge of the Company
threatened or contemplated with regard to any Taxes or Tax Returns of any
Transaction Party;
(d) The income Tax Returns of each Transaction Party have been
filed with the appropriate government entities for all periods through and
including 1999, and no
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deficiencies were asserted as a result of any such filings that have not been
resolved and fully paid; no Transaction Party has been granted any requests,
agreements, consents or waivers to extend the statutory period of limitations
applicable to the assessment, collection or payment of any Taxes for which a
Transaction Party may be liable;
(e) There are no Encumbrances outstanding against any assets,
properties or business of any member of any Transaction Party which arise from
or are otherwise related to Taxes or Tax Returns, and the Company has no
knowledge of any basis for the assertion of any claim relating or attributable
to Taxes which, if adversely determined, would result in any Encumbrance on any
asset of the Transaction Parties;
(f) True, correct and complete copies of all Tax Returns,
examination reports and statements of deficiencies assessed against or agreed to
by any Transaction Party since April 30, 1999 have been made available to the
Subscriber for its review;
(g) The unpaid Taxes of the Transaction Parties did not, as of the
date of any of the Financial Statements, exceed the reserve for Tax Liability
set forth on such Financial Statements, and the unpaid Taxes of the Transaction
Parties will not exceed that reserve as adjusted on their Books and Records for
payments and accruals made through the Closing Date in accordance with the past
custom and practice of the Transaction Parties in filing their Tax Returns;
(h) The Transaction Parties are not parties to any Tax sharing, Tax
indemnity or other agreement or arrangement relating to Taxes with any Person.
2.20 INTELLECTUAL PROPERTY RIGHTS. The Transaction Parties have
interests in or use only the Intellectual Property disclosed in Schedule 2.20,
each of which the Transaction Parties have either all right, title and interest
in or a valid and binding license to use. No other Intellectual Property is used
or necessary in the conduct of the business of the Transaction Parties. Except
as disclosed in Schedule 2.20, (i) the Transaction Parties have the exclusive
right to use the Intellectual Property disclosed in Schedule 2.20, (ii) all
registrations with and applications to Governmental or Regulatory Authorities in
respect of such Intellectual Property are valid and in full force and effect and
are not subject to the payment of any Taxes or maintenance fees or the taking of
any other actions by the Transaction Parties to maintain their validity or
effectiveness, (iii) there are no restrictions on the direct or indirect
transfer of any license, or any interest therein, held by any Transaction Party
in respect of such Intellectual Property, (iv) the Company has delivered to
Subscriber prior to the execution of this Agreement documentation with respect
to any invention, process, design, computer program or other know-how or trade
secret included in such Intellectual Property, which documentation is accurate
in all material respects and reasonably sufficient in detail and content to
identify and explain such invention, process, design, computer program or other
know-how or trade secret and to facilitate its full and proper use without
reliance on the special knowledge or memory of any Person, (v) the Transaction
Parties have taken reasonable security measures to protect the secrecy,
confidentiality and value of their trade secrets, (vi) no Transaction Party is,
or has received any notice that it is, in default (or with the giving of notice
or lapse of time or both, would be in default) under any License to use such
Intellectual Property and (vii) the Company has no knowledge that such
Intellectual Property is being infringed by any other Person. No Transaction
Party has received notice that any
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Transaction Party is infringing any Intellectual Property of any other Person,
no claim is pending or, to the knowledge of the Company, has been made to such
effect that has not been resolved and, to the knowledge of the Company, no
Transaction Party is infringing any Intellectual Property Rights of any other
Person. No Transaction Party uses any Intellectual Property owned by or licensed
to any Person, director, officer or employee of any Transaction Party.
2.21 INSURANCE. Schedule 2.21 contains a true and complete list
(including the names and addresses of the insurers, the expiration dates
thereof, the annual premiums and payment terms thereof and a brief description
of the interests insured thereby) of all liability, property, workers'
compensation, directors' and officers' liability and other insurance policies
currently in effect that insure the business, operations or employees of any
Transaction Party, affect or relate to the ownership, use or operation of any of
the assets and properties of any Transaction Party and that (i) have been issued
to any Transaction Party or (ii) have been issued to any Person (other than a
Transaction Party) for the benefit of any Transaction Party. The insurance
coverage provided by the policies described in clause (i) above will not
terminate or lapse by reason of the transactions contemplated by this Agreement.
Each policy listed in Schedule 2.21 is valid and binding and in full force and
effect, no premiums due thereunder have not been paid and neither the
Transaction Party nor the Person to whom such policy has been issued has
received any notice of cancellation or termination in respect of any such policy
or is in default thereunder. No Transaction Party has received notice that any
insurer under any policy referred to in this Section is denying liability with
respect to a claim thereunder or defending under a reservation of rights clause.
2.22 ENVIRONMENTAL MATTERS. Each of the Transaction Parties has
obtained all Permits which are required in respect of its business, operations
or assets and properties under applicable Environmental Laws. Each of the
Transaction Parties is in compliance in all material respects with the terms and
conditions of all such Permits and with any applicable Environmental Law. Except
as set forth in Schedule 2.22 (with paragraph references corresponding to those
set forth below):
(a) No order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or, to the
knowledge of Company, threatened by any Governmental or Regulatory Authority
with respect to any alleged failure by any Transaction Party to have any Permit
required in connection with the conduct of the business or operations of any
Transaction Party and the Company has no knowledge of any facts or circumstances
which could reasonably be expected to form the basis for any such order,
complaint, penalty or investigation.
(b) There are no Encumbrances (other than Permitted Encumbrances)
arising under or pursuant to any Environmental Law or order on any real property
owned or leased by any Transaction Party, and no action of any Governmental or
Regulatory Authority has been taken or, to the knowledge of the Company, is in
process which could subject any of such properties to such Encumbrances.
(c) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by, or which are in the
possession of, any Transaction Party
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in relation to any property or facility now or previously owned or leased by any
Transaction Party which have not been delivered to Subscriber prior to the
execution of this Agreement.
2.23 GUARANTEES. Except as set forth on the Financial Statements no
Transaction Party is directly or indirectly, (i) liable, by guarantee or
otherwise, upon or with respect to, (ii) obligated by discount or repurchase
agreement or in any other way to provide funds with respect to, or (iii)
obligated to guarantee or assume, any debt, dividend or other obligation of any
Person, except endorsements made in the ordinary course of business in
connection with the deposit of items for collection.
2.24 COMPUTER PROGRAMS AND SOFTWARE. Schedule 2.24 lists all technology
consisting of computer programs and software used by each Transaction Party
(other than standard operating software used by businesses generally), and any
and all present and prior versions, new releases and derivative products related
thereto or resulting therefrom (the "Software") and all pieces of Software (i)
are licensed by the applicable Transaction Party under valid license agreements,
(ii) constitute original works for hire compiled or prepared by employees of the
applicable Transaction Party within the scope of their employment, the right,
title and interest (including copyright to such Software) being vested in the
applicable Transaction Party or (iii) are works prepared or performed by
consultants to the applicable Transaction Party, all right, title and interest
in and to such Software having been transferred and being vested in such
Transaction Party, with no royalties or other payments due in respect thereof.
Each Transaction Party has all documentation necessary to enforce its rights in
the Software.
2.25 NO ILLEGAL OR IMPROPER TRANSACTIONS. No Transaction Party has, nor
has any director, officer or employee of any Transaction Party, (a) paid,
offered or promised to pay, or authorized the payment, directly or indirectly
through any other Person or firm, of any monies or anything of value to (i) any
Person or firm employed by or acting for or on behalf of any Person, whether
private or governmental, or (ii) any government official or employee or any
political party or candidate for political office, for the purpose of illegally
or improperly inducing or rewarding any action by any official favorable to any
Transaction Party or any other Person in connection with a Transaction Party or
(b) taken any other act that, if taken by a Person subject to United States Law,
would be reasonably likely to violate the FCPA (any such act, a "Prohibited
Payment"). A Prohibited Payment shall not include the payment of reasonable and
bona fide expenditures, such as travel and lodging expenses, which are directly
related to the promotion, demonstration or explanation of products or services,
or the execution or performance of a contract with a foreign government or
agency thereof, provided such payments are permissible under Applicable Law and
guidelines applicable to the recipient of such payments.
2.26 BANK AND BROKERAGE ACCOUNTS; INVESTMENT ASSETS. Schedule 2.26 sets
forth (a) a true and complete list of the names and locations of all banks,
trust companies, securities brokers and other financial institutions at which
any Transaction Party has an account or safe deposit box or maintains a banking,
custodial, trading or other similar relationship; (b) a true and complete list
and description of each such account, box and relationship, indicating in each
case the account number and the names of the respective officers, employees,
agents or other similar representatives of any Transaction Party having
signatory power with respect thereto; and (c) a list of each Investment Asset,
the name of the record and beneficial owner thereof, the location
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of the certificates, if any, therefor, the maturity date, if any, and any stock
or bond powers or other authority for transfer granted with respect thereto.
2.27 NO POWERS OF ATTORNEY. Except as set forth in Schedule 2.27, no
Transaction Party has any powers of attorney or comparable delegations of
authority outstanding.
2.28 BOOKS AND RECORDS. The minute books and other similar records of
the Transaction Parties as made available to Subscriber prior to the execution
of this Agreement contain a true and complete record, in all material respects,
of all action taken at all meetings and by all written consents in lieu of
meetings of the stockholders, the boards of directors and committees of the
boards of directors of the Transaction Parties. The stock transfer ledgers and
other similar records of the Transaction Parties as made available to Subscriber
prior to the execution of this Agreement accurately reflect all record transfers
prior to the execution of this Agreement in the capital stock of the Transaction
Parties. Except as set forth in Schedule 2.28, no Transaction Party has any of
its Books and Records recorded, stored, maintained, operated or otherwise wholly
or partly dependent upon or held by any means (including any electronic,
mechanical or photographic process, whether computerized or not) which
(including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of a Transaction Party.
2.29 DISCLOSURE. No representation or warranty contained in this
Agreement, and no statement made by any of the Transaction Parties to the
Subscriber or contained in the Schedules or in any certificate, list or other
writing furnished to Subscriber pursuant to any provision of this Agreement
(including without limitation the Financial Statements), contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
ARTICLE III
REPRESENTATIONS OF THE SUBSCRIBER
In order to induce the Company to enter into this Agreement and in
order to induce the Company to issue the Preferred Stock, the Subscriber
represents, warrants and agrees as follows:
3.1 EXISTENCE AND GOOD STANDING; POWER AND AUTHORITY. The Subscriber is
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its organization. The Subscriber has the requisite power and
authority to execute and deliver the Documents to which it is a party and
perform its obligations thereunder. Each of the Documents to which it is a party
has been duly authorized and approved by the Subscriber, and assuming due
execution by the other parties thereto is a valid and binding obligation of the
Subscriber enforceable against the Subscriber in accordance with its terms,
except to the extent that its enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
effecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding brought in equity or law).
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3.2 RESTRICTIVE DOCUMENTS. The Subscriber is not subject to any
mortgage, lien, lease, agreement, instrument, order, law, rule, regulation,
judgment or decree, or any other restriction of any kind or character, which
would prevent consummation by the Subscriber of the transactions contemplated
hereby.
3.3 PURCHASE FOR INVESTMENT. (a) The Subscriber will acquire the
Preferred Stock for its own account for investment and not with a view toward
any resale or distribution thereof.
(b) The Subscriber understands that the Preferred Stock has not
been registered under the Securities Act or under any state securities laws and
may not be sold or transferred unless it is subsequently registered under the
Securities Act and any applicable state or other securities laws, or unless
exemptions from registration under such laws are available;
(c) The Subscriber represents that it is experienced in investment
matters, including a general knowledge of the communications markets in Brazil,
fully understands the transactions contemplated by this Agreement, has the
knowledge and experience in financial matters as to be capable of evaluating the
merits and risks of its investment and has the financial ability and resources
to bear the economic risks of its investment;
(d) The Subscriber is an "accredited investor" as defined in Rule
501(a) under the Securities Act; and
(e) The Subscriber represents and warrants that it has had the
opportunity to ask questions of and receive answers from the Transaction Parties
regarding the terms and conditions of the offering of the Preferred Stock and
the business, properties, prospects and financial condition of the Transaction
Parties.
3.4 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm acting
on behalf of the Subscriber is, or will be, entitled to any commission or
broker's or finder's fees from any Transaction Party, or from any Person
controlling, controlled by or under common control with any Transaction Party,
in connection with the transactions contemplated hereby.
3.5 RESTRICTED SECURITIES. Subscriber understands that the shares of
Preferred Stock it is purchasing are characterized as "restricted securities"
under the federal securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may not be resold without
registration under the Act, except in certain limited circumstances. In this
regard, Subscriber represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
3.6 LEGENDS. It is understood that the certificates evidencing the
Preferred Stock may bear one or all of the following legends:
(a) "These securities have not been registered under any federal or
state securities laws and may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with respect
to the securities under applicable securities law or an opinion of counsel
satisfactory to the Company that such sale, pledge, offer or hypothecation does
not violate applicable securities laws."
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(b) "This security is subject to the provisions of an Investors
Rights Agreement, dated May 31, 2000, among Intercontinental Telecommunications
Corp., Capital Communications CDPQ Inc., and the other shareholders of
Intercontinental Telecommunications Corp., which agreement contains certain
provisions restricting the transfer of this security, copies of which Investors
Rights Agreement are on file at the principal office of Intercontinental
Telecommunications Corp. Intercontinental Telecommunications Corp. shall
furnish, without charge to any shareholder of Intercontinental
Telecommunications Corp., copies of such Investor Rights Agreement."
(c) Any legend required by applicable blue sky laws.
ARTICLE IV
COVENANTS
The Company covenants and agrees with the Subscriber that, at all times
from and after the date hereof until the Closing, the Company will comply with
all covenants and provisions of this Article IV, except to the extent Subscriber
may otherwise consent in writing.
4.1 REGULATORY AND OTHER APPROVALS. The Company will, and will cause
the Subsidiaries to, (a) take all commercially reasonable steps necessary or
desirable, and proceed diligently and in good faith and use all commercially
reasonable efforts, as promptly as practicable to obtain all consents, approvals
or actions of, to make all filings with and to give all notices to Governmental
or Regulatory Authorities or any other Person required of any Transaction Party
to consummate the transactions contemplated by this Agreement or any of the
Documents, (b) provide such other information and communications to such
Governmental or Regulatory Authorities as such Governmental or Regulatory
Authorities may reasonably request and (c) cooperate with Subscriber as promptly
as practicable in obtaining all consents, approvals or actions of, making all
filings with and giving all notices to Governmental or Regulatory Authorities or
other Persons required of Subscriber to consummate the transactions contemplated
by this Agreement or any of the Documents.
The Company will provide prompt notification to Subscriber when any
such consent, approval, action, filing or notice referred to in clause (a) above
is obtained, taken, made or given, as applicable, and will advise Subscriber of
any communications (and, unless precluded by Law, provide copies of any such
communications that are in writing) with any Governmental or Regulatory
Authority or other Person regarding any of the transactions contemplated by this
Agreement or any of the Documents.
4.2 DILIGENCE BY SUBSCRIBER. The Company will, and will cause the other
Transaction Parties to (a) provide Subscriber and its officers, directors,
employees, agents, counsel, accountants, financial advisors, consultants and
other representatives (together "Representatives") with full access, upon
reasonable prior notice and during normal business hours, to all officers,
employees, agents and accountants of the Transaction Parties and their assets
and properties and Books and Records, and (b) furnish Subscriber and such other
Persons with all such information and data (including, without limitation,
copies of contracts, benefit plans and other Books and Records) concerning the
business and operations of the Transaction
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Parties or any other information and data that the Subscriber and such other
Persons may reasonably request in connection with such diligence.
4.3 NO SOLICITATIONS. The Company shall not, and shall cause the other
Transaction Parties to not (or authorize or permit any investment banker,
financial advisor, attorney, accountant or other Person retained by or acting
for or on behalf of any Transaction Party or any such Affiliate) take, directly
or indirectly, any action to initiate, assist, solicit, receive, negotiate,
encourage or accept any offer or inquiry from any Person (a) to engage in any
business combination with any Transaction Party, (b) to reach any agreement or
understanding (whether or not such agreement or understanding is absolute,
revocable, contingent or conditional) for, or otherwise attempt to consummate,
any business combination with any Transaction Party or (c) to furnish or cause
to be furnished any information with respect to any Transaction Party (other
than as contemplated by Section 4.2) who any Transaction Party (or any such
Person acting for or on their behalf) knows or has reason to believe is in the
process of considering any business combination with any Transaction Party. If
any Transaction Party (or any such Person acting for or on their behalf)
receives from any Person (other than Subscriber or any other Person referred to
in Section 4.2) any offer, inquiry or informational request referred to above,
the Company will promptly advise such Person, by written notice, of the terms of
this Section 4.3 and will promptly, orally and in writing, advise Subscriber of
such offer, inquiry or request and deliver a copy of such notice to Subscriber.
4.4 CONDUCT OF BUSINESS. The Company shall, and shall cause the other
Transaction Parties, to conduct business only in the ordinary course of
business. Without limiting the generality of the foregoing, the Company will:
(a) cause the Transaction Parties to use commercially reasonable
efforts to (i) preserve intact the present business organization and reputation
of the Transaction Parties, (ii) keep available (subject to dismissals and
retirements in the ordinary course of business) the services of the present
officers, employees and consultants of the Transaction Parties, (iii) maintain
the assets and properties of the Transaction Parties in good working order and
condition, ordinary wear and tear excepted, (iv) maintain the good will of
customers, suppliers, lenders and other Persons to whom any Transaction Party
sells goods or provides services or with whom any Transaction Party otherwise
has significant business relationships and (v) continue all current sales,
marketing and promotional activities relating to the business and operations of
the Transaction Parties;
(b) except to the extent required by Applicable Law, (i) cause the
Books and Records to be maintained in the usual, regular and ordinary manner and
(ii) not permit any material change in (A) any pricing, investment, accounting,
financial reporting, inventory, credit, allowance or Tax practice or policy of
any Transaction Party, (B) any method of calculating any bad debt, contingency
or other reserve of any Transaction Party for accounting, financial reporting or
Tax purposes or (C) the fiscal year of any Transaction Party;
(c) (i) use commercially reasonable efforts to maintain in full
force and effect until the Closing substantially the same levels of coverage as
the insurance afforded under the contracts listed in Schedule 2.8, (ii) to the
extent requested by Subscriber prior to the Closing Date, use all commercially
reasonable efforts to cause such insurance coverage held by any
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Person (other a Transaction Party) for the benefit of any Transaction Party to
continue to be provided at the expense of the Transaction Parties after the
Closing on substantially the same terms and conditions as provided on the date
of this Agreement and (iii) cause any and all benefits under such contracts paid
or payable (whether before or after the date of this Agreement) with respect to
the business, operations, employees or assets and properties of the Transaction
Parties to be paid to the Transaction Parties; and
(d) comply and cause the officers and directors of the Transaction
Parties to comply, in all material respects, with Applicable Laws to the
business and operations of the Transaction Parties, including, without
limitation, the FCPA, and promptly following receipt thereof to give Subscriber
copies of any notice received from any Governmental or Regulatory Authority or
other Person alleging any violation of any such Applicable Law.
4.5 EMPLOYEE MATTERS. Except as may be required by Applicable Law, the
Company will refrain and will cause the other Transaction Parties to refrain,
from directly or indirectly:
(a) making any representation or promise, oral or written, to any
officer, employee or consultant of any Transaction Party concerning any benefit
plan, except for statements as to the rights or accrued benefits of any officer,
employee or consultant under the terms of any benefit plan;
(b) making any increase in the salary, wages or other compensation
of any officer, employee or consultant of any Transaction Party whose annual
salary is or, after giving to such change, would be U.S.$50,000 or more;
(c) adopting, entering into, amending, modifying or terminating
(partially or completely) any benefit plan except to the extent required by
Applicable Law and, in the event compliance with legal requirements presents
options, only to the extent that the option which the Transaction Party
reasonably believes to be the least costly is chosen;
(d) establishing or modifying any (i) targets, goals, pools or
similar provisions in respect of any fiscal year under the Employee Stock Option
Plan or any other benefit plan, employment contract or other employee
compensation arrangement or (ii) salary ranges, increase guidelines or similar
provisions in respect of the Employee Stock Option Plan or any other benefit
plan, employment contract or other employee compensation arrangement; or
(e) entering into, amending, modifying or terminating (partially or
completely), any contract that is, or had it been in existence on the date of
this Agreement would have been required to be, disclosed in Schedule 2.8(a).
The Company shall, and will cause the other Transaction Parties to,
administer each benefit plan, or cause the same to be so administered, in all
material respects in accordance with Applicable Laws.
4.6 NOTICE AND CURE. The Company will notify Subscriber promptly in
writing of, and contemporaneously will provide Subscriber with true and complete
copies of any and all information or documents relating to, and will use all
commercially reasonable efforts to cure before the Closing, any event,
transaction or circumstance occurring after the date of this
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Agreement that causes or will cause any covenant or agreement of the Company
under this Agreement to be breached or that renders or will render untrue any
representation or warranty of the Company contained in this Agreement as if the
same were made on or as of the date of such event, transaction or circumstance.
The Company also will notify Subscriber promptly in writing of, and will use all
commercially reasonable efforts to cure, before the Closing, any violation or
breach of any representation, warranty, covenant or agreement made by the
Company in this Agreement, whether occurring or arising before, on or after the
date of this Agreement. No notice given pursuant to this Section shall have any
effect on the representations, warranties, covenants or agreements contained in
this Agreement for purposes of determining satisfaction of any condition
contained herein or shall in any way limit Subscriber's right to seek indemnity
under Article X.
ARTICLE V
ISSUANCE OF SECURITIES; PAYMENT OF SUBSCRIPTION PRICE; CLOSINGS
5.1 ISSUANCE OF PREFERRED STOCK. Subject to the terms and conditions
set forth in this Agreement, including, without limitation, Articles II and VI,
on the Closing Date, the Company agrees to sell to the Subscriber, and the
Subscriber agrees to subscribe from the Company, the Preferred Shares. Delivery
of the Preferred Stock to be purchased by the Subscriber pursuant to this
Agreement shall be made, pursuant to Section 5.4, on the Closing Date by the
Company to the Subscriber, against payment of the Subscription Price.
5.2 SUBSCRIPTION PRICE. Subject to the terms and conditions set forth
in this Agreement, in full consideration for the issuance by the Company of the
Preferred Stock to the Subscriber, the Subscriber shall deliver to the Company
$20,000,000.35, or $4.07 per Preferred Share (the "Subscription Price"), on the
Closing Date, by wire transfer of immediately available funds to the accounts
specified by the Company and listed on Schedule 5.2 attached hereto.
5.3 TIME AND PLACE OF CLOSINGS. The deliveries made on the Closing Date
(the "Closing") shall take place at 10:00 a.m. on the Closing Date, or such
other time as the Company and the Subscriber shall mutually agree. Unless
otherwise required by either party hereto, the deliveries required at closing
shall be effected by facsimile transmission, with original documents to be sent
via overnight delivery.
5.4 CLOSING DELIVERIES. At the Closing the Company shall deliver, or
cause to be delivered, to the Subscriber the following: (i) certificates
representing the number of Preferred Shares to be issued and delivered free and
clear of all Encumbrances with all necessary share transfer and other
documentary stamps attached at the expense of the Company, (ii) evidence or
copies of any consents, approvals, orders, qualifications, agreements or waivers
required pursuant to Article VI, (iii) the opinion described in Section 6.12,
(iv) a certificate executed by the President of the Company substantially in the
form of Exhibit H hereto, (v) a certificate, executed by the Secretary of the
Company in the form of Exhibit I hereto, and (vi) all other certificates and
other instruments and documents required by this Agreement to be delivered by
the Company to the Subscriber at or prior to the Closing.
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ARTICLE VI
CONDITIONS TO THE SUBSCRIBER'S OBLIGATIONS
The obligations of the Subscriber to purchase the Preferred Stock
contemplated by this Agreement is conditioned upon satisfaction, at or prior to
the Closing, of the following conditions:
6.1 GOOD STANDING AND OTHER CERTIFICATES. The Subscriber shall have
received (a) a copy of the certificate of incorporation or other organizational
documents of the Company, including all amendments thereto, certified by the
Secretary of Florida, (b) a certificate from the Secretary of State or other
appropriate official of the respective State or country of incorporation or
formation to the effect that the Company is in good standing and listing all
charter documents of such entity, (c) a copy of the bylaws of the Company and
the resolutions of the Board of Directors of the Company authorizing the
transactions contemplated under the Documents, certified by the Secretary of the
Company as being true and correct and in effect on the Closing Date, and in a
manner satisfactory to the Subscriber, and (d) true and complete copies of the
certificate or articles of incorporation and by laws (or other comparable
charter documents) of each Subsidiary as in effect on the date hereof.
6.2 TRUTH OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Company contained in this Agreement and
the other Documents, shall be true and correct in all material respects on and
as of such Closing Date other than such representations and warranties made as
of a specific date, which shall be true and correct in all material respects as
of such date, with the same effect as though such representations and warranties
had been made on and as of such date.
6.3 PERFORMANCE OF AGREEMENTS. The Company shall be in compliance with
the Documents in all material respects and, shall have performed in all material
respects all of its agreements and covenants thereunder which are required
thereunder to be performed prior to the Closing Date.
6.4 NO LITIGATION. No Action or Proceeding shall have been instituted
or, to the knowledge of the Company, threatened before a court or other
government body or by any public authority to restrain or prohibit any of the
transactions contemplated by the Documents. No Transaction Party shall be a
party to any Action or Proceeding.
6.5 THIRD PARTY CONSENTS; GOVERNMENTAL APPROVALS. All consents,
approvals, authorizations, exemptions or waivers required in connection with the
consummation of the transactions contemplated by the Documents shall have been
received.
6.6 CERTIFICATE OF DESIGNATION. The Company shall have delivered to the
Subscriber evidence that the Certificate of Designation of the Company shall
have been duly filed with the Secretary of State of Florida and shall be in full
force and effect.
6.7 INVESTOR RIGHTS AGREEMENT. The Company and each shareholder of the
Company shall have delivered the Investor Rights Agreement to the Subscriber.
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6.8 TAXES; FINANCIAL STATEMENTS. (a) The Company shall have delivered
to the Subscriber true and complete copies of the Financial Statements set forth
in Section 2.5 herein;
(b) The Company shall have delivered to Subscriber evidence,
satisfactory to the Subscriber, that: (i) no Transaction Party owes any past due
Taxes under Applicable Law, and (ii) there are no Tax claims against any of the
Transaction Parties.
6.9 TRANSFER OF MICROTEC LICENSES. The Company shall have delivered an
opinion of Xxxxxxx & Xxxxxxx, special Brazilian regulatory counsel to the
Company, in form and substance satisfactory to the Subscriber, as to the ability
of the Transaction Parties to use the Microtec Licenses and as to the ability of
Vitech or its affiliates to transfer the Microtec Licenses to the Company and
the other Transaction Parties.
6.10 NO MATERIAL ADVERSE EFFECT. No Transaction Party shall have
suffered a Material Adverse Effect. Between the date of this Agreement and the
date of subscription for the Preferred Shares, the Transaction Parties shall
have conducted their respective business in the ordinary and regular course.
6.11 COMPLIANCE WITH LABOR LAW REGULATIONS. The Company shall be in
compliance in all material respects with all laws and regulations pertaining to
labor matters, and there shall not be any outstanding employment benefit issues
or claims (including those related to pensions and fringe benefits), the failure
of which to resolve could have a Material Adverse Effect.
6.12 OPINIONS OF COMPANY COUNSEL. The Subscriber shall have received an
opinion of Xxxxx & XxXxxxxx, general outside corporate and securities counsel to
the Company, and Xxxxxxx & Xxxxxxx, special Brazilian regulatory counsel to the
Company, reasonably satisfactory in form and substance to the Subscriber, as to
the matters specified on Exhibit C (and allocated between such counsel as
specified therein), including, without limitation, the validity and
transferability of the Microtec Licenses to the Company.
6.13 D & O INSURANCE. The Company shall have used its best efforts to
have in effect a liability insurance policy covering the Company's directors and
officers in their capacities as such, providing for coverage of not less than an
aggregate of $5,000,000 and an indemnification and hold harmless agreement,
satisfactory to the Subscriber, shall have been executed by the Company in favor
of its officers and directors.
6.14 BUSINESS PLAN. The Company shall have delivered to Subscriber
evidence that the Business Plan has been adopted.
6.15 ONGOING BUSINESS. The Company shall have demonstrated to the
Subscriber's satisfaction that it has applied for 3.5 GHz frequencies in twenty
key locations/cities necessary to deploy its backup and technology migration
plan for local access.
6.16 PREFERRED STOCK. Simultaneously with and as a result of the
Closing, the Subscriber shall have acquired 4,914,005 shares of Preferred Stock,
representing 30.09% of the total capital stock of the Company then issued and
outstanding and 18.41% of the capital stock of the Company on a fully diluted
basis. Simultaneously with and as a result of the Closing, the
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Company shall have delivered to the Subscriber stock certificates representing
the Preferred Shares.
6.17 EMPLOYEE CONFIDENTIALITY. The Company shall have caused its
officers, directors, and the officers and directors of the Subsidiaries, and any
other employee who has access to confidential information (as defined in the
Confidentiality Agreement), to execute a confidentiality agreement in the form
attached hereto as Exhibit F.
6.18 OTHER DOCUMENTS. The Company shall have delivered to the
Subscriber the documents described in Section 5.4.
6.19 TRANSFER OF CONTRACTS. The Company shall have used and shall
continue to use its best efforts to assign to the Transaction Parties in a
manner satisfactory to the Subscriber each agreement, contract, instrument or
commitment listed on Schedule 2.8(f), other than those agreements, contracts,
instruments or commitments that may not be assigned until such time as the
Microtec Licenses are assigned.
6.20 JOINT MARKETING AGREEMENT. The Company and Vitech shall have
amended and restated the Joint Marketing Agreement to include Microtec as a
party and in a manner satisfactory to the Subscriber.
ARTICLE VII
CONDITIONS TO THE COMPANY'S OBLIGATIONS
The issuance of the Preferred Stock by the Company is conditioned upon
satisfaction, at or prior to the Closing, of the following conditions:
7.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Subscriber contained in this Agreement shall be true and
correct on and as of the Closing Date other than such representatives and
warranties made as of a specific date, which shall be true and correct in all
material respects as of such date, with the same effect as though such
representations and warranties had been made on and as of such date.
7.2 THIRD PARTY CONSENTS; GOVERNMENTAL APPROVALS. All consents,
approvals authorizations, exemptions or waivers, if any, required in connection
with the consummation of the transactions contemplated by this Agreement on the
part of the Subscriber shall have been received.
7.3 PERFORMANCE OF AGREEMENT. The Subscriber shall have performed in
all material respects, its obligations under this Agreement.
7.4 NO LITIGATION. No Action or Proceeding shall be instituted or, to
the knowledge of the Subscriber, threatened before a court or other government
body or any public authority to restrain or prohibit any of the transactions
contemplated hereby.
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ARTICLE VIII
POST-CLOSING AGREEMENTS
8.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. (a) For so long as the
Subscriber holds the Preferred Stock or shares of common stock obtained in
connection with the Preferred Stock, the Company shall deliver to Subscriber:
(i) within 45 days after the end of each of the first three
quarterly accounting periods in each fiscal year, consolidated
statements of earnings, shareholders' equity and cash flows of the
Company for such fiscal quarter, and a consolidated balance sheet of
the Company as of the end of such fiscal quarter, all prepared in
accordance with GAAP, consistently applied, subject to normal year-end
adjustments, and certified by the Chief Financial Officer and Chief
Executive Officer of the Company.
(ii) within 90 days after the end of each fiscal year, audited
consolidating and consolidated statements of earnings, shareholders'
equity and cash flows of the Company for such fiscal year, and
consolidated and consolidating balance sheets of the Company as of the
end of such fiscal year, setting forth in each case comparisons to
comparable budgeted figures and comparable figures for the preceding
fiscal year, all prepared in accordance with GAAP, consistently
applied, and certified by, (a) with respect to the consolidated
portions of such statements, an independent accounting firm of national
recognition (such certification to be accompanied by a copy of such
firm's annual management letter to the management of the Company) and
(b) with respect to the consolidating portions of such statements, the
Chief Financial Officer and Chief Executive Officer of the Company.
(b) For so long as Subscriber holds at least twenty percent (20%)
of the Preferred Shares purchased hereunder (or an equivalent amount of Common
Stock issued upon conversion of the Preferred Shares), the Company shall provide
Subscriber:
(i) within 30 days following the end of each month and 45 days
following the end of each fiscal quarter, statements of earnings,
shareholders' equity and cash flows of the Company for such month or
fiscal quarter as the case may be, prepared by the Company in the
ordinary course of its business.
(ii) prior to each fiscal year, the Company's proposed budget
for such year, setting forth the expected revenues, expenses and
capital expenditures on a monthly and quarterly basis.
(c) Notwithstanding anything herein in this Section 8.1 to the
contrary, the rights of Subscriber under this Section 8.1 shall terminate when
the Company first becomes subject to the periodic reporting requirements of
Sections 12(g) or 15(d) of the 1934 Act.
8.2 RESERVATION OF COMMON STOCK; VALID ISSUANCE. (a) The Company shall
at all times reserve for issuance free from preemptive rights and other rights
to preempt or subscribe, (i) a number of shares of Common Stock at least equal
to the number of shares of Common
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Stock issuable upon conversion or exercise of the Preferred Stock and (ii) all
other securities of the Company convertible into Common Stock.
(b) The shares of Common Stock issuable upon conversion or exercise
of the Preferred Stock, when issued in accordance with their respective terms,
will be validly issued, fully paid and nonassessable, free of all preemptive or
similar rights, and shall be delivered free and clear of all Encumbrances.
8.3 FURTHER ASSURANCES; POST-CLOSING COOPERATION. (a) At any time or
from time to time after the Closing, the Company shall execute and deliver to
Subscriber such other documents and instruments, provide such materials and
information and take such other actions as Subscriber may reasonably request
more effectively to vest title to the Preferred Stock in Subscriber.
(b) Following the Closing, the Company will afford the Subscriber,
its counsel and its accountants, during normal business hours, reasonable access
to the books, records and other data relating to the business or condition of
the Transaction Parties in its possession with respect to periods prior to the
Closing and the right to make copies and extracts therefrom, to the extent that
such access may be reasonably required by the requesting party in connection
with (i) the preparation of Tax Returns, (ii) the determination or enforcement
of rights and obligations under this Agreement, (iii) compliance with the
requirements of any Governmental or Regulatory Authority, (iv) the determination
or enforcement of the rights and obligations of any Indemnified Party or (v) any
actual or threatened Action or Proceeding. Further, each party agrees for a
period extending six (6) years after the Closing Date not to destroy or
otherwise dispose of any such books, records and other data unless such party
shall first offer in writing to surrender such books, records and other data to
the other party and such other party shall not agree in writing to take
possession thereof during the ten (10) day period after such offer is made.
(c) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations hereunder,
it is necessary that a party be furnished with additional information, documents
or records relating to the business or condition of the Company not referred to
in paragraph (b) above, and such information, documents or records are in the
possession or control of the other party, such other party shall use its best
efforts to furnish or make available such information, documents or records (or
copies thereof) at the recipient's request, cost and expense. Any information
obtained by the Company in accordance with this paragraph shall be held
confidential by the Company in accordance with Section 12.1.
(d) Notwithstanding anything to the contrary contained in this
Section, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records in accordance
with any provision of this Section shall be subject to applicable rules relating
to discovery.
8.4 COMPLIANCE WITH FCPA. The Company shall at all times comply and
cause the officers and directors of the Transaction Parties to comply, in all
material respects, with Applicable Laws to the business and operations of the
Transaction Parties, including, without
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limitation, the FCPA, and promptly following receipt thereof to give Subscriber
copies of any notice received from any Governmental or Regulatory Authority or
other Person alleging any violation of any such Applicable Law.
8.5 USE OF PROCEEDS. The Company shall use the proceeds of the issuance
of the Preferred Stock for the purposes set forth in the Business Plan.
8.6 TRANSFER OF MICROTEC LICENSES. The Company shall use its best
efforts to cause each of the Microtec Licenses that is not transferred to the
Company prior to the Closing to be transferred outright to the Company or to
other Transaction Parties promptly following the Closing.
8.7 TRANSFER OF CONTRACTS. The Company shall use its best efforts to
cause to be assigned to the Transaction Parties in a manner satisfactory to the
Subscriber promptly following the Closing each agreement, contract, instrument
or commitment listed on Schedule 2.8(f) that is not assigned prior to the
Closing.
ARTICLE IX
SURVIVAL
9.1 SURVIVAL. Except as expressly provided in this Agreement, the
covenants contained in this Agreement, including, without limitation, those
contained in Article VIII, shall survive the Closing Date indefinitely. The
representations and warranties of the Company and the Subscriber contained in
this Agreement and the schedules and certificates delivered in connection
herewith shall survive until two (2) years from the Closing Date, except as to
any matters with respect to which a bona fide written claim shall have been made
or an Action or Proceeding shall have commenced before such date, in which event
survival shall continue until the final resolution of such claim, including all
applicable periods for appeal provided, however, that (i) the representations,
warranties, and covenants contained in Sections 2.1, 2.2, and 2.11 hereof and
this Section 9.1 shall survive without time limit; (ii) the representations,
warranties and covenants relating to Taxes and environmental matters shall
survive until six (6) months following the expiration of the applicable statutes
of limitations relating to claims with respect thereto (giving effect to any
extension thereof by waiver or otherwise), and (iii) no time limitation will
apply if either shall fail to notify the other in writing promptly upon becoming
aware of its breach or failure to comply with a representation or warranty
contained herein.
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION. The Company agrees to indemnify and hold the
Subscriber and its officers, directors, employees, Affiliates, advisors,
consultants and agents, and any successors thereto (and any officers, directors,
employees, Affiliates and agents of such successors) harmless from any
liability, damage, deficiency, demand, claim, suit, action, or cause of action,
fine, penalty, loss, cost, expense, including without limitation, reasonable
attorney fees (but offset by any proceeds from insurance and taking into account
the present value of any tax savings to Subscriber or its Affiliates resulting
from such losses, liabilities, damages,
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deficiencies, demands, claims, suits, actions, or causes of actions, fines,
penalties, losses, costs or expenses) ("Damages") incurred or suffered as a
result of the failure of any representation or warranty made by the Company
pursuant to this Agreement, any schedule or exhibit to this Agreement or any
certificates delivered pursuant thereto to be true and correct as of the date
hereof and on the Closing Date or any breach by the Company of an obligation or
covenant contained herein.
10.2 CONTRIBUTION; LIMITATIONS ON INDEMNIFICATION. (a) To the extent
that the undertaking to indemnify, pay or hold harmless the Subscriber pursuant
to Section 10.1 of this Agreement may be unenforceable, the Company shall make
the maximum contribution to the payment and satisfaction of each of the
indemnified liabilities which is permissible under Applicable Law.
(b) No claims shall be made against the Company for Damages of the
Subscriber unless and until such Damages aggregate to $200,000 or more (the
"Basket Amount"), in which event, one or more claims for all such Damages may be
made against the Company, subject to the remaining provisions of this Article
IX. It is expressly understood that the Basket Amount shall not serve as a
"deductible" (for example, if the indemnity claims for which the Subscriber
would, but for the provisions of this subparagraph (b), be liable is in the
aggregate amount of $201,000, the Losses for which a claim is to be made against
the Company would then be for the entire $201,000, and not just $1,000).
Further, with respect to claims for indemnification resulting from the failure
of any representation or warranty made by the Company pursuant to this
Agreement, any schedule or exhibit to this Agreement or any certificates
delivered pursuant thereto to be true and correct as of the date hereof and on
the Closing Date or any breach by the Company of an obligation or covenant
contained herein, other as specifically provided in this Section 10.2, the
Company shall only be responsible for Damages up to an aggregate amount of
$5,000,000. Notwithstanding the foregoing, the Company's responsibility to the
Subscriber shall be up to an aggregate amount equal to the Subscription Price
plus any and all fees and expenses (including, without limitation, attorneys'
fees) with respect to the failure of any representation or warranty made by the
Company pursuant to Sections 2.1, 2.2, 2.3, 2.4, 2.8, 2.12, 2.15, 2.14, 2.18,
2.19, 2.20, 2.23 and 2.25 of this Agreement or any breach by the Company of an
obligation or covenant contained in Section 4.4(d).
10.3 INDEMNIFICATION PROCEDURE. The party making a claim for
indemnification under this Section 10.3 is hereinafter referred to as the
"Indemnified Party" and the party against whom such claim is asserted under this
Section 10.3 is hereinafter referred to as the "Indemnifying Party". All claims
by an Indemnified Party shall be asserted and resolved as provided for in this
Section 10.3.
(a) In the event that any Indemnified Party receives notice of the
commencement of any action or proceeding that asserts a claim by a third party
or the imposition of any penalty or assessment for which indemnity may be sought
pursuant to this Section 10.3 (a "Third Party Claim") or suffers any Damages,
and such Indemnified Party may be entitled to seek indemnity, such Indemnified
Party shall promptly after receiving such notice provide the Indemnifying Party
with notice of such Third Party Claim or at any time after determining the
existence of a Damages in which a third party is involved.
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(b) The Indemnifying Party shall, upon receipt of such notice, be
entitled to participate in or, at the Indemnifying Party's option, assume the
defense, appeal or settlement of such Third Party Claim with respect to which
such indemnity has been invoked with counsel of its own choosing, and the
Indemnified Party shall fully cooperate with the Indemnifying Party in
connection therewith including contesting such Third Party Claim or making any
counterclaim against the Person asserting such Third Party Claim; provided,
however, that the Indemnified Party shall be entitled to employ one counsel to
represent itself if the Indemnified Party receives an opinion of counsel that an
actual conflict of interest exists (provided that the existence of the indemnity
shall not be deemed to constitute a conflict) between the Indemnifying Party and
the Indemnified Party in respect of such Third Party Claim and, in that event,
the reasonable fees and expenses of such additional counsel shall be paid by the
Indemnifying Party; and provided, further, that any Indemnified Party is hereby
authorized prior to the date on which it receives written notice from the
Indemnifying Party that it intends to assume the defense, appeal or settlement
of such Third Party Claim, to file any motion, answer or other pleading and take
such other action that it shall reasonably deem necessary to protect its
interest or that of the Indemnifying Party until the date on which the
Indemnified Party receives such notice from the Indemnifying Party. In the event
that the Indemnifying Party fails to assume the defense, appeal or settlement of
such Third Party Claim within ten (10) days after receipt of notice thereof from
the Indemnified Party, such Indemnified Party shall have the right to undertake
the defense or appeal of or settle or compromise such Third Party Claim on
behalf of and for the account and risk of the Indemnifying Party.
(c) No claim or demand may be settled by an Indemnified Party
without the consent of the Indemnifying Party, which consent shall not be
unreasonably withheld, except as set forth in the last sentence of Section
10.3(b) above. Unless the Indemnifying Party shall have agreed in writing that
any and all damages to the Indemnified Party related to a claim or demand are
fully covered by the indemnities provided herein, no such claim or demand may be
settled by the Indemnifying Party without the consent of the Indemnified Party,
which consent shall not be unreasonably withheld.
(d) To the extent it shall subsequently be determined by
arbitration or litigation that the Indemnified Party shall have no right
pursuant to this Section 10.3 to be indemnified by the Indemnifying Party, the
Indemnified Party shall promptly pay to the Indemnifying Party any amounts
previously paid or advanced by the Indemnifying Party to the Indemnified Party
with respect to such matters pursuant to this Section 10.3.
(e) Any indemnifiable claim under this Section 10 that is not a
Third Party Claim shall be asserted by written notice to the Indemnifying Party.
If the Indemnifying Party does not respond within sixty (60) days after receipt
of such notice, it shall not have the right to contest the validity of such
claim. Any uncontested claim or portion thereof shall be paid by the
Indemnifying Party within fifteen (15) days after the sixty-day period referred
to in the preceding sentence.
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ARTICLE XI
TERMINATION
11.1 TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement of
the Company and Subscriber;
(b) at any time before the Closing, by the Company, (i) in the
event of a material breach hereof by Subscriber if the Subscriber fails to cure
such breach within five (5) Business Days following notification thereof by the
Company or (ii) upon notification of the Subscriber by the Company that the
satisfaction of any condition to its obligations under this Agreement becomes
impossible or impracticable with the use of commercially reasonable efforts if
the failure of such condition to be satisfied is not caused by a breach hereof
by the Company;
11.2 EFFECT OF TERMINATION. If this Agreement is validly terminated
pursuant to Section 11.1, this Agreement will forthwith become null and void,
and there will be no liability or obligation on the part of the Company or
Subscriber (or any of their respective officers, directors, employees, agents or
other representatives or Affiliates), except as provided in the next succeeding
sentence and except that the confidentiality in Section 12.1 will continue to
apply following any such termination. Notwithstanding any other provision in
this Agreement to the contrary, upon termination of this Agreement pursuant to
Section 11.1 as a result of the breach of this Agreement by the Subscriber, the
Subscriber shall have no claim against any of the Transaction Parties for
Damages.
ARTICLE XII
MISCELLANEOUS
12.1 CONFIDENTIALITY. Each of the parties hereto will hold, and will
cause their officers, directors, Affiliates, and their respective officers and
directors (and, in the case of the Company, the other Transaction Parties) to
hold, in strict confidence from any Person, unless (i) made pursuant to a press
release mutually agreed to by the parties, (ii) compelled to disclose by
judicial or administrative process (including without limitation in connection
with obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of Governmental or Regulatory Authorities) or by other
requirements of Applicable Law or (iii) disclosed in an Action or Proceeding
brought by a party hereto in pursuit of its rights or in the exercise of its
remedies hereunder, all documents and information concerning the other party
hereto or any of its Affiliates furnished to it by the other party or such other
party's representatives in connection with this Agreement or the transactions
contemplated hereby ("Confidential Information"), provided that the recipient of
Confidential Information hereunder shall be bound by a confidentiality agreement
governed by the same terms as of this Section 12.1 and except to the extent that
such documents or information can be shown to have been (a) previously known by
the party receiving such documents or information, (b) in the public domain
(either prior to or after the furnishing of such documents or information
hereunder) through no fault of such receiving party or (c) later acquired by the
receiving party from another
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source if the receiving party is not aware that such source is under an
obligation to another party hereto to keep such documents and information
confidential. Notwithstanding the foregoing, the parties hereto shall be
permitted to disclose Confidential Information to their employees, advisors and
agents to the extent that such disclosure is necessary in connection with the
evaluation and consummation of the transactions contemplated hereby.
12.2 KNOWLEDGE OF THE COMPANY. Where any representation or warranty
made by the Company contained in this Agreement is expressly qualified by
reference to its knowledge, such knowledge shall be deemed to exist if the
matter should be within the actual or constructive knowledge of any Transaction
Party's director, executive officer or other senior member of management
(including, without limitation, the Transaction Party's internal counsel) after
due investigation.
12.3 EXPENSES. Subject to the completion of the Closing, the Company
agrees to pay the reasonable costs and expenses incurred by the Subscriber in
connection with the transactions contemplated hereby and the Subscriber's
investment in the Company (including without limitation, reasonable attorneys'
fees and expenses), at Closing or within fifteen (15) of the presentation of
supporting documentation to the Company; provided, however, that in no event
shall the Company be required to make payments under this Section in excess of
an aggregate of $125,000.
12.4 GOVERNING LAW. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of New York applicable to agreements executed and to be performed solely
within such State, without regard to any laws, rules or regulations regarding
conflicts of law (other than Section 5-1401 of the General Obligations Law of
the State of New York).
12.5 CAPTIONS. The Article and Section captions used herein are for
reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
12.6 PUBLICITY. Except as otherwise required by law, none of the
parties hereto shall issue any press release or make any other public statement,
in each case relating to, connected with or arising out of this Agreement or the
matters contained herein or therein, without obtaining the prior approval of the
Subscriber and the Company to the contents and the manner of presentation and
publication thereof.
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12.7 NOTICES. Any notice or other communication required or permitted
under this Agreement shall be sufficiently given if delivered in person or sent
by telecopy, facsimile or by registered or certified mail, postage prepaid,
addressed as follows:
if to the Company:
Notice Address:
Intercontinental Telecommunications Corp.
0000 Xxxxxxxxx 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Xxxxxx Xxxxxx
Attention: Xxxxx Xxxxx, Senior Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
E-mail: xxxxxxxxx@xxxxxx.xxx
With copies to:
Intercontinental Telecom Corporation do Brasil S/C Ltda.
Av. do Cafe, 277 - 5th Floor - Tower A
Centro Empresarial do Aco, Vl. Guarani
Sao Paulo, SP
Brazil
Attention: Xxxxxx Xxxxxxx, CFO
Telephone: (00 00) 0000-0000
Facsimile: (00 00) 0000-0000
E-mail: xxxxxx@xxxxxxxxx.xxx.xx
and to:
Xxxxx & XxXxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Xxxxxx Xxxxxx
Attention: Xxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
E-mail: xxxxxx.xxxxx@xxxxxxxx.xxx
and if to the Subscriber:
Capital Communications CDPQ Inc.
Xx Xxxxxx de depot et placement du Quebec
Place Mercantile, 2001, Avenue XxXxxx Xxxxxxx
0xx Xxxxx, Xxxxxxxx, Xxxxxx
Xxxxxx X0X 0X0
Attention: President
Telecopier: (000) 000-0000
with copies to:
Xxxxxx Xxxx
Senior Legal Counsel
Xx Xxxxxx de depot et placement du Quebec
0000 Xxxxxx XxXxxx Xxxxxxx
Xxxxxxxx, X.X. X0X-0X0
Xxxxxx
Facsimile: (000) 000-0000
E-mail: xxxxx@xxxxxxxx.xxx
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and:
Xxxxxxx X. Xxxxxxx
Telinvest Management Corporation
000 Xxxx Xxxx Xxxx., Xxxxx 000
Xxxxx, XX 00000
Facsimile: (000) 000-0000
E-mail: xxxxxxx.xxxxxxx@xxxxxxxxx.xxx
with a copy to its counsel
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Xxxxxx Xxxxxx
Attention: Xxxxxxxx Xxxxxxx Bourelly, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
E-mail: xxxxxxxxxxxxxxxx@xxxxxx.xxx
or such other address or number as shall be furnished in writing by any such
party, and such notice or communication shall be deemed to have been given upon
automatic confirmation of receipt by the receiving machine if sent by telecopier
or facsimile, upon delivery if delivered in person, and upon mailing if mailed.
The parties may exchange communication by any other means including, without
limitation, via Internet, but in no event such communication shall be considered
a notice under this Agreement.
12.8 PARTIES IN INTEREST. No party hereto may transfer, assign or
pledge any of its rights in, or otherwise grant any rights to any Person in or
under this Agreement.
12.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
12.10 ENTIRE AGREEMENT. This Agreement, the Certificate of Designation
and the Investor Rights Agreement, including the exhibits, schedules, and other
documents referred to herein and therein which form a part hereof and thereof,
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and therein. This Agreement, the Certificate of
Designation and the Investor Rights Agreement supersede all prior agreements and
understandings between the parties with respect to such subject matter.
12.11 AMENDMENTS. This Agreement may not be changed orally, but only by
an agreement in writing signed by the Subscriber and the Company.
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12.12 SEVERABILITY. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
12.13 THIRD PARTY BENEFICIARIES. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto (and, in the case of the
Subscriber, its transferees) and those Persons entitled to indemnification
pursuant to Article X hereof.
12.14 ARBITRATION. (a) Any dispute, controversy or claim arising out
of, relating to, or in connection with, this Agreement, or breach, termination
or validity hereof (the "Dispute") shall be settled by mediation first, and if
not possible, by arbitration, and the results of such mediation or arbitration,
as the case may be, shall be final and binding upon the parties hereto. The
arbitration shall be conducted in accordance with the International Arbitration
Rules of the American Arbitration Association in effect at the time of the
arbitration, except as they may be modified herein or by the mutual agreement of
the parties. The seat of the arbitration shall be Miami, Florida, and all
arbitration proceedings shall be conducted in the English language.
(b) The party initiating arbitration (the "Claimant") shall appoint
its arbitrator in its request for arbitration (the "Request"). The other party
(the "Respondent") shall appoint its arbitrator within 30 days of receipt of the
Request and shall notify the Claimant of such appointment in writing. If the
Respondent fails to appoint an arbitrator within such 30-day period, the
arbitrator named in the Request shall decide the controversy or claim as sole
arbitrator. Otherwise, the two arbitrators appointed by the parties shall
appoint a third arbitrator within 30 days after the Respondent has notified the
Claimant of the appointment of the Respondent's arbitrator. When the arbitrators
appointed by the Claimant and Respondent have appointed a third arbitrator and
the third arbitrator has accepted the appointment, the two arbitrators shall
promptly notify the parties of the appointment of the third arbitrator. If the
two arbitrators appointed by the parties fail or are unable to appoint a third
arbitrator or so notify the parties, then the appointment of the third
arbitrator shall be made by the American Arbitration Association, which shall
promptly notify the parties of the appointment of the third arbitrator. The
third arbitrator shall act as chairman of the panel.
(c) The arbitral award shall be in writing and shall be final and
binding on the parties. The award may include an award of costs, including
reasonable attorneys' fees and disbursements. Judgment upon the award may be
entered by any court having jurisdiction thereof or having jurisdiction over the
parties or their assets.
(d) Each of the parties hereto hereby irrevocably acknowledges and
consents that any legal Action or Proceeding brought with respect to any of the
obligations arising under or relating to this Agreement shall only be brought in
accordance with this Section 12.14, and each of the parties hereto hereby
irrevocably submits to and accepts with regard to any such action proceeding,
for itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid arbitration panel. Each party hereby further
irrevocably waives any claim that any such arbitration panel lack jurisdiction
over such party, and agrees not to plead or claim, in any legal Action or
Proceeding with respect to this Agreement or the transactions contemplated
hereby brought in any of the aforesaid courts, that any such arbitration panel
lacks
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jurisdiction over such party. Each party irrevocably consents to the service of
process in any such Action or Proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to such party, at its address for
notices set forth in Section 12.7. Each party hereby irrevocably waives any
objection to such service of process and further irrevocably waives and agrees
not to plead or claim in any Action or Proceeding commenced hereunder or under
any other documents contemplated hereby that service of process was in any way
invalid or ineffective. The foregoing shall not limit the rights of any party to
serve process in any other manner permitted by law. The foregoing consents to
jurisdiction shall not constitute general consents to service of process for any
purpose except as provided above and shall not be deemed to confer rights on any
Person other than the respective parties to this Agreement.
(e) To the fullest extent permitted by Applicable Law, each of the
parties hereto hereby irrevocably waives the objection which it may or may not
or hereafter have to the laying of the venue of any suit, Action or Proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby in Miami, Florida, and hereby further irrevocably waives and agrees not
to plead or claim that such venue is not a convenient forum for any such
proceeding.
12.15 ENGLISH LANGUAGE. This Agreement has been negotiated in the
English language. All documents and certificates delivered pursuant to this
Agreement and the other Documents shall be in the English Language, except if
issued by a Governmental or Regulatory Authority located outside the United
States, in which case such document or certificate shall be accompanied by an
English translation.
(signature page follows)
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IN WITNESS WHEREOF the Subscriber has signed this Subscription
Agreement and the Company has caused its corporate name to be hereunto
subscribed by its officers thereunto duly authorized, all as of the date first
above written.
INTERCONTINENTAL
TELECOMMUNICATIONS CORP.
By: /s/ Xxxxxxx St. Laurent
--------------------------------
Name: Xxxxxxx St. Laurent
--------------------------
Title: President
--------------------------
CAPITAL COMMUNICATIONS CDPQ INC.
By: /s/ Xxxxx Xx Xxxxxxxx
--------------------------------
Name: Xxxxx Xx Xxxxxxxx
--------------------------
Title: Vice-President
--------------------------
By: /s/ Xxxxxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxxxxx Xxxxxxx
--------------------------
Title: Manager
--------------------------
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